IMF: Jordan price hike ‘important step’

Updated 26 December 2012
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IMF: Jordan price hike ‘important step’

AMMAN: The IMF said yesterday Jordan's decision to raise fuel prices by up to 53 percent last month was "an important step," despite violent protests in which three were killed and more than 70 injured.
"Despite this challenging environment, the authorities have been implementing sound macroeconomic policies aimed at reducing fiscal and external imbalances in a socially acceptable way. The removal of general subsidies on all fuel products ... was an important step," it said in a statement.
"It reduced costs and risks to the budget from fluctuations in oil prices. Introducing targeted transfers at the same time mitigated the impact of fuel price increases for a large part of the population."
Jordan insists the price hike was "unavoidable" given the country's $ 5-billion (3.9-billion-euro) budget deficit, and that the measures would save $ 42 million by year end.
The country relies on imports for 95 percent of its energy needs and has been struggling to find affordable alternatives to Egyptian gas supplies, which have been repeatedly hit by sabotage.
Amman has said Cairo resumed this month full gas supply of 250 million cubic meters (8.8 billion cubic feet) a day. "Jordan performed well under the program in 2012. The country has faced challenges during the year from the disruption of the flow of natural gas, the ongoing conflict in Syria, and an acceleration of influx of refugees," the IMF said.
"Combined with higher oil and food prices and a shortfall in grants, this has put further pressure on the country's economy. Nonetheless, growth is expected to increase slightly to 3 percent compared with 2.6 percent in 2011."
Following a Dec. 3 to 20 visit to Jordan, the IMF expected average inflation to be around 5 percent for the year.
The IMF said it plans to discuss with Jordan a 2013 plan to help address issues like hosting more 250,000 Syrian refugees who have fled the unrest in their homeland.
"This program will include specific policy measures that would help Jordan to reach its program objectives and address the key challenges it faces, including the large inflow of Syrian refugees," it said.


Oil prices gain on lower US crude inventories, Libyan output disruption

Updated 16 min 54 sec ago
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Oil prices gain on lower US crude inventories, Libyan output disruption

SINGAPORE: Oil prices recovered some day-earlier losses in Asia on Wednesday, supported by a drop in US commercial crude inventories and the loss of storage capacity in oil producer Libya.
US crude inventories fell by 3 million barrels to 430.6 million barrels in the week to June 15, according to American Petroleum Institute (API) in a weekly report on Tuesday.
Brent crude futures rose 18 cents, or 0.2 percent, to $75.26 per barrel at 0351 GMT, compared with their last close on Tuesday.
US West Texas Intermediate (WTI) crude futures gained 20 cents, or 0.3 percent, to $65.27.
Traders said a drop in Libyan supplies due to the collapse of an estimated 400,000-barrel storage tank also helped push up prices.
Looming larger over markets, however, is a June 22 meeting in Vienna of the Organization of the Petroleum Exporting Countries (OPEC) with some other producers, including Russia, to discuss supply.
De-facto OPEC leader and top crude exporter Saudi Arabia, as well as Russia, which is not a member of the cartel but is the world’s biggest oil producer, are pushing to loosen supply controls introduced in 2017 to prop up prices.
Other OPEC-members, including Iran, are against such a move, fearing a sharp slump in prices.
“Saudi Arabia and Russia continued to push for a relaxation in production constraints, going against many other members’ wishes,” ANZ bank said on Wednesday.
“Iran rejected a potential compromise, saying it won’t support even a small increase in oil production. This puts Saudi Arabia in a tough position, as unanimity is needed for any accord to be reached,” it added.
Jack Allardyce, oil-and-gas research analyst at Cantor Fitzgerald Europe, said he had the “expectation that supply quotas will be increased, but probably more in line with the smaller range being quoted (300,000-600,000 barrels per day) given the lack of consensus among OPEC members.”
Allardyce said “we could see this knocking $5 per barrel off Brent and perhaps squeezing the WTI discount a little.”
Markets are also anxiously watching trade tensions between the United States and China, in which both sides have threatened to impose stiff duties on each other’s exports, including US crude oil.
A 25 percent tariff on US crude oil imports, as threatened by China in retaliation for duties Washington has announced but not yet implemented against Chinese products, would make American crude uncompetitive in China versus other supplies.
This would almost certainly lead to a sharp drop-off in Chinese purchases of US crude, which have boomed in the last two years to a business now worth around $1 billion per month.